Mercedes Marquez has led a reorganization of the Los Angeles Housing Department (LAHD) since taking over as general manager in 2004.
Prior to joining the department, she was a vice president at McCormack Baron Salazar, Inc., a national development company specializing in urban communities. She also served in the Clinton administration as senior counsel to Secretary Andrew Cuomo and deputy general counsel for civil rights and fair housing at the Department of Housing and Urban Development.
In 2006, Marquez said she is excited about working with Los Angeles County and different city agencies on a more coordinated approach to meeting the area’s housing needs.
Q What are your goals for 2006?
A We have taken the time to reorganize and redesign several of our programs, particularly the rehab and homeownership programs. And now that we’ve tightened up the trust fund and that is really going full steam ahead, this year is about coordination with other departments in the city. This is the year we are talking about cross-cutting work. That would mean the planning department, the housing authority, the redevelopment agency. I would also say it would mean the department of transportation and the Metropolitan Transit Authority as we take a look at what smart growth will be, how it is we would map and decide on transit corridors so we will have a citywide coordinated approach to housing.
QWhat’s new at the housing department that affordable housing developers need to know about?
A This year we have funded the Affordable Housing Trust Fund for the first time at $100 million. When I got here two years ago, it was about $23 million. Then we moved up to about $40 million, but we actually made $50 million. This year, we started at $50 million and, with the mayor’s support, we are at $100 million for 2005 and 2006.
Q How much affordable housing will that produce?
A Much of it depends on particulars that I can’t control. But I would say of the $100 million this year, $50 million of that is dedicated to what we are now creating, which is a brand new permanent supportive housing program within the city of Los Angeles. We are working with the county of Los Angeles and other agencies on the issue of homelessness. We’re focusing directly on that problem. So, of the $100 million this year and probably next year, $50 million will be focused on our regular housing program and the second $50 million focused on permanent supportive housing.
For us, it is very important that we work with the county of Los Angeles to make sure that the housing and the services work together. In partnership with the county, we are attempting to work out what it will take to one day do a joint NOFA (Notice of Funding Availability), where you apply once and that gives you the housing dollars, the service dollars and the rent subsidies. We’re very hopeful, and the county is rolling up their sleeves with us. I’m very grateful to have their partnership.
Q What’s the biggest challenge for your department right now?
A The most difficult thing for us is that unlike other jurisdictions in the country, our income levels – our AMIs (area median incomes) – are relatively low but the cost of housing and land is very high, so in some ways we’re this perfect storm of very low incomes and very high prices, which makes it difficult for us, particularly in homeownership. Income restrictions hurt us terribly.
We’ve worked hard to use the (federal) money in the best way we can, and we’ve also made sure to use the nonfederal dollars that we have for homeownership. In that way, we’re the first city in the state to define workforce housing for people up to 150% of AMI. We’ve created a program that does two things. One, it gives soft seconds to moderate-income families. We have two tiers. For families between 81% and 120% of AMI, we offer a $75,000 no-interest, deferred-payment soft second [loan]. They don’t have to pay it back until they sell or refinance. For families between 121% and 150%, we offer $50,000, again no-interest, deferred payment. In the end, what we ask from both is an equity share. We’re willing to take the risk and invest with the family. We do an equity share instead of interest and then defer the payment.
We’ve also launched a forward-commitment program for developers who are building townhomes and condos. We will provide them a guarantee of sorts for units set aside for moderate-income families. Those get translated in the end as soft seconds to those families. This looks very promising. We’ve spoken with developers about what it would take to get them to work with our money, particularly for-sale developers who did not historically do business with the housing department. What we ended up doing was extending our customer base.
Q What housing department program is making the biggest difference in providing rental housing?
A The trust fund. We’re at $169 million in the trust fund that has been committed since 2003. That’s more than 4,400 units. It’s leveraged an additional $750 million in investments. By the end of the year, we will be at over $1 billion at full costs in investments.
Q The trust fund is important because it serves as gap financing.
A Depending on the round and what we are financing, we’ve probably leveraged anywhere between $3 and $4 for every dollar that we put in.
The other thing that we’re doing that is equally important is to deal with preservation. We’re the only city in the country that has a systematic code enforcement program. We inspect every rental unit in the city now on a four-year cycle. We finished our first cycle, which was a five-year cycle, in December 2005. What we found there is that we had over 1.9 million citations [for code violations]. We had a cost estimator take a look. It ended up reflecting $1.6 billion of private reinvestment [in upgrades and repairs to correct the violations] into L.A.’s housing stock. One of the things that we acknowledge in L.A. is that we cannot simply build our way out of the housing crisis that we have. Building new is important, but so is preserving. That one program alone has done an unbelievable job of helping maintain L.A.’s housing stock so much so that we were among Harvard’s six “innovation in American government” award winners this year.
I think the other thing is we are looking at the synergies between code enforcement and the rehab program, so we ended up creating a special rehab program. We call it the ‘mom and pop’ program. [For] low-income property owners, usually with two to four units – and they are usually seniors – we offer a special program to help them preserve the stock. Once they’re cited, what we found is that this subset of owners just [doesn’t] have the cash to be able to fix their units. They rely on the rent as their retirement income and often they live in one of the units. We’re trying to offer them the financing so that they can fix the units and maintain them for the future.
Q You mentioned some of the popular programs for developers. Is there one that developers are not quite as aware of as the trust fund? Is there one that’s perhaps underutilized that they should know about?
A Because it’s new, that would be the forward-commitment program for workforce housing. It gives people a soft second. We give the developer a guarantee so as they are beginning their financing, they can go to the bank and know that a certain percentage [of units] are being set aside and the housing department is committing soft seconds to them right up front.
Q Mayor Antonio Villaraigosa has proposed a $1 billion housing bond for the city. What’s the latest on that?
A Work on that continues to move forward. A priority, however, is the mayor’s effort to help make sure that in the state infrastructure bond that is being considered that housing is significantly represented. The Mayor’s Office has been involved in ensuring that there is money for housing in the [proposed] state bond. Once we’re there, we will have a sense of the gaps, [and] what the needs are that would help shape our bond.
(Editor’s note: Plans for a state infrastructure bond to be on the June ballot died, leaving supporters to look toward November.)